After an initial experiment in Luxembourg on a private blockchain, BNP Paribas AM is taking its first steps in tokenizing funds on the public Ethereum blockchain
Issuance of a tokenized share class for one of its French money market funds, registered for the first time on a public blockchain infrastructure: Ethereum
A money market fund… on a public blockchain! This is not a consumer product, but a full-scale intra-group test. BNP Paribas Asset Management has issued a tokenized share of an existing money market fund domiciled in France. This is clearly a new step in the exploration of fund tokenization
The project involved issuing a tokenized share of a BNP Paribas Asset Management money market fund on the public Ethereum network via BNP Paribas’ AssetFoundry platform. The tokenized shares are issued under a permissioned access model, in which ownership and transfers are limited to eligible and authorized participants, in accordance with applicable regulatory requirements.
“This initiative gives us a better understanding of the operational and governance challenges of tokenization for money market funds,” comments Julien Clausse, Head of AssetFoundry (Digital Assets & Tokenization), BNP Paribas CIB.
After an initial experience in Luxembourg
BNP Paribas Asset Management previously issued tokenized money market fund shares in Luxembourg on a private blockchain. This is therefore a second project, which this time has been implemented using a different technological and operational configuration based on a public blockchain.
Together, these initiatives illustrate BNP Paribas’ approach to exploring different tokenization and distribution models in order to better serve management companies and their investors.
“The goal here is to explore how tokenization can contribute to greater operational efficiency and enhanced security within a regulated framework,” continues Edouard Legrand, Chief Digital and Data Officer, BNP Paribas Asset Management
Leveraging BNP Paribas’ expertise within its integrated model
As part of this project, BNP Paribas Asset Management acted as the fund issuer. BNP Paribas Securities Services acted as transfer agent and fund processing service provider, while BNP Paribas CIB’s AssetFoundry platform provided tokenization and connectivity to the public blockchain.
In addition, BNP Paribas Securities Services set up the portfolio and stored the private key as part of this intra-group pilot experiment.
“By acting as transfer agent and leveraging the group’s tokenization infrastructure, we offer an efficient and secure operational organization for fund management processes based on a public blockchain infrastructure, within a regulated and permissioned access framework,” said Paul Daly, Head of Distribution Product Solutions, BNP Paribas Securities Services.
Public blockchain with permissioned access
The tokenized fund units were issued on the public Ethereum network using permissioned tokens, ensuring that only eligible participants can hold and transfer the tokens, while benefiting from the strength and widespread adoption of public blockchain infrastructures.
This approach allows BNP Paribas and BNP Paribas Asset Management to evaluate how public blockchains can be integrated into regulated fund structures, while maintaining the highest standards of governance, investor protection, and operational robustness.
Tokenization is an innovative technology currently being explored across the financial sector for its potential to improve the issuance and distribution of investment funds over time.
For money market funds in particular, which play a central role in managing the liquidity of companies and institutional investors, tokenization can be an alternative to traditional batch processing, allowing for more regular and flexible processing of fund-related transactions, while complying with the regulatory framework.
